Net sales increased from €11.05bn ($12.94bn) for the first half of 2016 to €12.13bn ($14.2bn) in H1 2017.

Danone said the 0.4% sales growth in the first half was as expected, and that its performance was in line with expectations, with preparations for acceleration.

New Danone

Due to the acquisition of WhiteWave, Danone’s financial statements for the first half of 2017 include adjusted “Like-for-like New Danone” figures, which combine Danone and WhiteWave results.

The adjust results in sales and recurring operating margin reflect the organic performance of Danone and WhiteWave combined. The indicator considers the activity of WhiteWave as a whole by integrating its companies during the fiscal years prior to and following their acquisition in April 2017: from April 1 to December 31 for periods compared until 2017 included; and from January 1 to December 31 for periods compared in 2018.

Changes to reporting

To reflect changes at Danone, including the integration of WhiteWave, the company has adopted a new breakdown of its business units and geographical markets for financial reporting starting in Q2 2017:

Fresh Dairy Products includes Danone’s Fresh Dairy Products in Europe, CIS and ALMA as well as WhiteWave’s business in Europe, Latin America and China, creating Essential Dairy and Plant-based International.

Specialized Nutrition includes Early Life Nutrition and Medical Nutrition.

Starting in the second quarter of 2017, results are reported for two regions: Europe and Noram combined to form a single region; and Rest of the World (RoW), which includes the current ALMA and CIS regions.

Q2 results

In Q2 2017, consolidated sales stood at €6.66bn ($7.8bn), up 0.2% on a “like-for-like New Danone” basis.

Growth reflects a 2.1% decline in volume and a 2.3% rise in value.

Reported sales were up 16% in Q2 2017, including the base effect related to the consolidation of WhiteWave from April 12, 2017; positive changes in exchange rates (1.3%) reflecting the Russian Ruble, the Brazilian Real and the US dollar’s favorable impacts; and negative changes in the scope of consolidation excluding WhiteWave (-0.4%), resulting primarily from the deconsolidation of Fresh Dairy Products operations in Columbia and Chile in Q4 2016 and Q1 2017 respectively.

Alpro going strong

The Essential Dairy & Plant-Based (EDP) International division reported sales down 1.8% in Q2 2017 on a “like-for-like New Danone” basis, including a 4.8% decline in volumes and a 3% rise in value.

In Europe, Danone adjusted its plans around the Activia brand throughout the second quarter. Packaging is being adjusted in five key markets and communication campaigns are being adapted locally as new products are being launched such as Activia drinks, Activia Double Zero, and Activia WeCereals.

New and local heritage brands including Les deux vaches in France, Light & Free in the UK, Danio in Poland and Benelux, and Oikos in Italy continued to grow successfully, Danone said.

In Latin America, global performance continued to suffer from sluggish consumer demand in Brazil while Mexico continued to display solid growth.

The newly acquired plant-based brand Alpro delivered a double-digit growth in Q2 2017, supported by strong dynamics in all countries where Alpro operates, such as the UK, Germany and Benelux.

EDP Noram

Danone said the yogurt segment demonstrated resilience in Q2 in the retail channel in the US, and there was high growth momentum in the coffee creamers segment.

In the plant-based segment, while the beverage business was negative, with the transition to new and improved Silk packaging fully completed in Q2, Vega continued to grow and expand, supported by robust plant-based nutritional category growth across channels and by good early results from recent innovations.

Specialized nutrition

Early Life Nutrition sales accelerated in Q2 2017, with Chinese market growth that has resumed since the beginning of the year.

Danone said progress has been achieved in developing a direct distribution model in China through a growing presence in specialized stores and direct e-commerce, as reflected by continued market share gains and double-digit growth in this channel.

It added sales through the indirect channel remained highly volatile: after declining for several consecutive quarters, Q2 sales growth was positive, but volatility should last over the rest of the year until new regulations are enforced in 2018.

Outlook for rest of 2017

Danone said it targets to deliver a double-digit recurring EPS growth at constant exchange rate for 2017, based on a moderate “Like-for-like New Danone” sales growth; and a sustained recurring operating margin improvement on a “like-for-like New Danone” basis.

“H1 2017 has been a period of intense construction for Danone, with the creation of the processes of decoupling of our growth and efficiency agendas, the creation of our regional grid, the launch of our €1bn ($1.17bn) savings Protein program and the integration of WhiteWave in Q2,” ​CEO Emmanuel Faber said.

He said the strong improvement in margin and EPS growth this semester bodes well for the company’s ability to reach its 2017 objectives, with expected growth acceleration in the course of the second half.

comments

Post your comment

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post
comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms
and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that
violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or
contact the editors.